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Planes & Paydirt

Planes & Paydirt

The resources industry has long been the dominant driver of the Australian economy, allowing the fly-in, fly-out phenomenon to thrive.

 According to one newspaper report, FIFO workers are associated with increasingly stressful lifestyle disruptions, including prolonged absences for workers from their partners and children, long working hours under difficult conditions, and large amounts of time spent commuting between work and home; not to mention problems associated with drugs and alcohol. Another report suggested that there was an attrition rate of one-in-three workers quitting the mines after a year on the job and that newbies looking for mining work in WA can no longer demand the lucrative incomes that once made a career in the resources industry so appealing.

However, despite the headlines, the negativity doesn’t seem to extend to the aviation sector largely because the resource companies demand the very highest standards from FIFO companies and the many modern aircraft transporting workers across the country reflect this commitment from operators. One such operator, Network Aviation, so impressed Qantas that in 2010 the “flying kangaroo” bought them out, reportedly for $30 million, but kept Network’s management team, including CEO and founder Lindsay Evans.

At the time, Evans admitted that the state’s booming fly-in, fly-out industry took him and his company to a surprisingly quick buy-out. “When we started in 1998 we had two aircraft, a Cessna 310, which carries five passengers, and a Cessna Conquest, which carries 10 passengers,” he said. “Since that time the mining industry has grown dramatically and our fleet has grown along with our customers. Their mines have grown in size so our aircraft have increased in size.”

Evans founded Network Aviation in 1998 following a seven-year stint as general manager at Skippers Aviation. By the time Qantas came knocking just 12 years later, Network had grown to become WA’s third-biggest regional airline, boasting two 100-seat Fokker 100 jets, six 30-seat Embraer Brasilia turboprops and 150 employees.

Qantas’s buy-out of Network markedly increased its share of WA’s FIFO sector. Evans – Network’s managing director and 49.9 per cent shareholder – said Network’s growth had been beyond anything he imagined.

“I think as a business owner you’re always thinking about an exit strategy and this purchase has been exceedingly well received by the staff and me,” he said. “I think it positions the company for a very strong future.”

Under the deal, Network became a wholly owned subsidiary of Qantas, joining its regional network, QantasLink. It continues to trade under the Network Aviation banner, and retains its staff and management, including Evans, who remains as chief executive.

“We had to start changing our culture from a GA culture to an airline culture, with detailed safety management, risk assessment and the like,” Evans said. “We had a basic safety management system from Day One in the company. It was a reactive system; people could fill in pieces of paper about hazards that occurred. We would then analyse the hazards and come up with a solution. Over time we’ve started looking at data and trends – taking a more proactive approach. Now the safety management system is entirely electronic.”

Evans added that in his 20 years in air charter, overall safety standards have improved enormously. “The standard of operation in most respects is almost the same as RPT,” he said. “That would not have been the case 15 years ago for fly-in, fly-out operations.”

He also warned that there was a growing disparity between the haves and have nots in the charter industry. “There’s a great divide in being able to afford to have all the systems and facilities in place (for fly-in, fly-out operations). Our customers won’t use us unless we have all the (appropriate) facilities, plus environmental policies and all the rest. The companies that haven’t got that are stuck with small-end charters and ad hoc work, and there’s no future in that.”

NOT to be outdone by Qantas, Virgin Australia in January 2011 established a 10-year alliance with Perth-based Skywest Airlines whereby the WA flagship would operate turboprops in Virgin colours. The alliance was part of a new push by Virgin into regional Australia. In April this year, Virgin Holdings Australia Ltd completed its 100 per cent acquisition of Skywest. While WA’s former flagship no longer exists and has become a part of the Virgin brand, it continues to operate under its current AOC and autonomous management team.

Boasting a fleet of Fokker 50s, Fokker 100s, Airbus A320s and ATR 72s, Virgin Australia Regional Airlines offers scheduled RPT services plus a range of charter supporting the resources industry. Contracts within the resources industry include flights between Perth and various mining destinations, including Argyle; the West Angelas Mine; Barimunya (also known as Yandi for BHP Billiton); Coondewanna, also known as Area C, the sister site to Barimunya; Brockman 4 Mine; Windarling (on behalf of Portman Iron Ore); The Granites mine site in the Tanami Desert (on behalf of Newmont Tanami); Ravensthorpe Nickel Mine (with First Quantum Minerals); and Geraldton to Paraburdoo via Brockman.

Needless to say, the charter market is thriving with significant opportunities for the carrier in WA, where the enormous mining and resources sector accounts for a staggering 60 per cent of the state’s total exports. Charter business is expected to continue expanding, not just for Qantas and Virgin Australia, but also for other players in what is a fiercely competitive market. More than $180 billion in resource projects are planned or underway in Western Australia alone, with many of those requiring charter flights to fly staff into and out of their remote locations.

BROOME AIR SERVICES

THERE is no doubt that the resources boom has has been a major boon for regional aviation. It has enabled more modern aircraft to be purchased or leased and has encouraged discerning investment. Broom Air Services has been providing mine support since 2006 and in that time, the 22-plane operation has become an accomplished operator within the industry.

“We’re probably the most audited company in Australia,” says Managing Director Peter Christoudias. “The mining companies are very demanding when it comes to issues such as safety management and risk assessment. We do one external safety audit every month, but sometimes we’ll have two or three audits in one month. It can be quite intense.”

BAS provides air charter services to the mining industry throughout the Kimberley and Pilbara region. Utilising a fleet of aircraft ranging from Cessna 210s to a newly acquired Beech 1900C, the company provides practical solutions to mining sites on a contract or ad hoc basis.

“We fly everywhere,” Christoudias says. “Our services could include flying to Perth and back with a tractor part or a belt or it could be transporting executives to a mining site, it really depends on what the clients need.”

So has the industry changed in the time BAS has been involved in mine support?

“Yes,” Christoudias replies, “it has become a lot safer. We’ve been using a safety management system since 2008 and we’ve had no unwanted surprises, so its been working well.”

Despite predicting that the mining boom will soften and start to slow down some time in the near future, not to mention the challenge of keeping experienced pilots, Christoudias says business has been steady and the company will invest in small to medium-size jets within the next two years.

“There’s going to be a softening of the mining boom but it won’t have a huge impact on us,” he says. “We’ve just purchased a Beech 1900C and we’re looking at buying some big aircraft. We will have jets within two years … things are looking good.”

 

JETGO

WHILE the mining boom and fly-in, fly-out phenomenon is huge in WA, it has also made a significant impact in Queensland. Since commencing flying operations in March 2012, newcomers JETGO, who operate out of Brisbane and Townsville, has enjoyed outstanding success with its fleet of three Embraer 135s. The fledgling company’s decision to target a niche market and provide a modern all-jet service has proved to be a popular course of action.

“You’ll never ever fix the tyranny of distance so why would companies want to subject their staff to hours and hours of flying in turboprops?” asks Chief Operating Officer and co-founder Arron Mulder. “We are pretty much the only business in the fly-in, fly-out world that operates an aircraft that is still in production. This  means that we have a full factory support for our aircraft including a ready supply of spare parts, offering long term advantages over our competitors. We have a niche market, we’ve done something different. Our business plan is working and in the first 12 months or so we’re profitable and revenues are 50 per cent better than anticipated.”

Sixty five to 70 per cent of  JETGO’s business is in the fly-in, fly-out sector, with the company’s jets operating services to the Osborne copper-gold mine, some 195 km south-east of Mt Isa; plus semi-regular FIFO work to other ports around Queensland. The remaining 30-35 per cent of business is comprised of regular charter work Australia-wide.

It has often been said that the resources and minerals boom has had a positive impact on aviation, mainly due to the mining industry’s rigorous safety culture. Mining clients demand consistency and on-time performance, while operational standards have improved as clients have become more informed and demanding about safety. Charter demand has shifted away from small piston-engine types towards turbines and jets and as a consequence, the vast skies of outback Australia have become more crowded than ever.

The mining companies’ lofty expectations of their aviation partners has seen some businesses crumble under the pressure of practices that many consider to be intrusive to their operations; while others have thrived and earned a lucrative income far beyond their wildest dreams. Mulder confirms that the mining companies are very thorough and meticulous but he welcomes the high expectations and even the practice of external auditing. “It’s very intense,” he says. “You’ll find that most of the major airlines have their own internal audit facilities and departments and where small operators such as ourselves, have that capability, I welcome external audits because to be honest, it’s the opportunity for someone else to look at our operation. It’s an external health check of the organisation.” And it’s a health check that both the mining companies and the operators take very seriously.

When asked to nominate the major issues currently facing the FIFO industry, Mulder replies: “It’s an understanding of aircraft capabilities; it’s operating an efficient schedule with regards to maximising the use of a crew within duty time periods. And in our case, it’s gaining an understanding of the advantage that a jet brings over a turboprop.

“The fly-in, fly-out industry has changed in that it demands more capacity and more capability. When we apply the aircraft in its niche role it’s very capable and all our customers are happy. The reality is if you have a small group to go over a long distance it’s the right aircraft for this country because you’ll never change the distances. We’ve brought jet capabilities to people who in past have solely relied on turboprops.

Mulder believes there are other niche operations that would suit the company’s 36-seat Embraer 135 and he’s confident that there’s enough work to justify expanding the fleet sometime in the near future. “We see a need for more aircraft in the future,” he says. “There are certain other niche operations out there that the aircraft are ideally suited for, and there is more than enough work out there and the long term prospects are very good. The sub 400 kilometre markets are mostly turboprop territory.  However if the clients want to go further, then jets really come into their own in terms of comfort and time savings and for clients with 36 or less passengers to move nothing else comes close to the economics of our our 135s. Plus the perfomance of the 135LRs enables direct flights of up to 2,500 kilometres with a full payload in temperatures up to 43 degrees celsius.

So what of the big picture?

I believe that if we have a change of government and there is a further depreciation of the Australian dollar, there will be numerous more mining projects either restarting or opening in the near future. The big picture is there’s more than enough work out there but we’re specifically looking at long range, small groups. The turboprop market and the100 seat markets are already very well serviced by other capable operators, however we’ve got no-one else in our market, but having said that, I don’t believe our market is big enough to sustain another entrant.”

AEROMETREX

TOPOGRAPHY information and high resolution imagery provides invaluable inputs to the mining industry, from the exploration, design, development and rehabilitation phase of small and large mining projects. The use of remotely-sensed data is an efficient and cost-effective alternative to field-survey, especially for very large exploration areas as well as a non-disruptive solution during operations.

Adelaide-based AEROmetrex provides full aerial mapping services and products to a variety of clients, including those in the mining industry.

“We provide the full range of aerial photographic surveying services, including orthophotos, digital elevation models, mapping and engineering surveys,” explains Managing Director Mark Deuter. “Our most recent service is 3D modelling of mine sites and infrastructure and so forth, which has really started to hit its straps.” Indeed, AEROmetrex invented a new process that is designed to model smallish areas but in photo realistic 3D detail and with a very high degree of accuracy and very high resolution.

So how critical is aerial mapping to the mining industry?

Aerial mapping is a huge boon to efficiency,” Deuter says. “We can capture very large areas, we can document entire exploration leases in a very short space of time for environmental monitoring or we can focus on target areas for infrastructure development, construction and engineering.”

Depending on who performs the survey, AEROmetrex can also assess volumes to a very high degree of accuracy and comprehensiveness.

“We  operate our cameras from fixed wing aircraft, helicopters, UAVs, and cars; they’re all variations on the same theme but the techniques vary a little bit from one camera system to the next,” Deuter says. “Aerial surveying is far more efficient than any other platform.

“Due to AEROmetrex continually crossing Australia with our plane and camera systems we have been able to supply numerous mineral exploration companies with regional tenement surveys in some very remote areas. These have provided a very cost effective base dataset to some of Australia’s most progressive explorers.”

The resources industry will continue to work side-by-side with aviation, ensuring that the fly-in, fly-out phenomenon is here to stay. Families can better choose where they want to live but still be employed in positions that best meet their skills and circumstances. Regional aviation is providing more labour mobility and flexibility for resource companies.

The demand for mobile labour is likely to grow. The Asian economies are strengthening and require more raw material for their manufacturing. Australia is their obvious business partner and we must scale up to meet this demand. Having workers who are mobile, skilled and confident that their family’s needs are being met will encourage increased productivity and competitiveness.

There is little doubt that Australia is undergoing fundamental economic and social changes.  The mineral resources industry is a vital part of these changes and, despite some negative press, is likely to remain so for some time.

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